NCEA Level 2 Economics (90796) 2010 — page 1 of 4
Assessment Schedule – 2010
Economics – Describe economic growth and its causes and effects using economic models
(90796)
Evidence Statement
Q
Evidence
ONE
(a)
New Zealand financial
institutions have less deposits
to lend out. This means that
less funds will be available for
investment and the flow of
investment funds will decrease.
(b)
(c)
A decrease in investment funds
available will reduce New
Zealand firms’ ability to invest.
This, in turn, reduces AD as
Gross Fixed Capital Formation
(I) is part of the GDP equation.
Reduced investment will lower
productivity and productive
capacity, resulting in falling
output and economic growth
declines.
Economic growth: eg
 Coal mining will increase
output in the economy, so
growth will occur. This is
because of more being
produced in the mining
industry, also the revenue
earned by those involved in
the industry will be spent so
AD increases, and more of
other goods and services
will be produced to meet the
extra demand.
Trade impact: eg
 Fewer tourists visiting the
national parks that are being
mined, also possible
damage to NZ’s clean,
green image so a drop in
export revenue from tourism
 Coal can be exported, so
export revenue will increase
and the balance on goods /
current account will improve.
Also less reliance on
imported fuels.
Environmental impact eg
 Coal extraction can cause
damage to the environment
eg destruction of forests and
animal habitats
 Revenue from coal
extraction could be used for
environmental projects that
would otherwise not be
undertaken.
Achievement
ONE of:
 identifies the
investment
fund flow
decreases
 states that
there will be a
decrease in
funds
available to
borrow
States that coal
mining will result
in increased
output
OR
describes an
impact of mining
on trade and the
environment.
Merit
General
explanation of
ONE of:
 why the
investment
fund flow will
decrease
 effect of
reduced
investment on
growth.
General
explanation of
why mining will
result in growth
OR
general
explanation of an
impact on trade
and the
environment.
Excellence
Code
In-depth
explanation
linking fewer
funds to borrow to
reduced
investment, lower
AD, or
productivity or
productive
capacity AND
falling output and
growth.
A/M/E
In-depth
explanation of
why mining will
result in growth,
including a
reference to the
wider economy
AND
in-depth
explanation of an
impact on trade
and the
environment.
A/M/E
NCEA Level 2 Economics (90796) 2010 — page 2 of 4
Q
Evidence
TWO
(a)
An increase in real GDP means
that there is more actual / real
output.
An increase in productive
capacity means that potential
output has increased.
(b)
(c)
See Appendix One.
The PPC shows the maximum
possible output combinations of
capital and consumer goods.
An increase in efficiency means
that the economy will move
closer to the maximum possible
output as the current level of
resources can produce more.
So real GDP will increase, and
economic growth will increase
because of the increase in real
output.
Net Social Welfare is a better
measure of economic growth
because it takes account of
economic or material welfare
(do people have more and / or
better possessions?) and noneconomic welfare (do people
have to put up with greater
stress, pollution and
congestion?).
The other measures of growth
don’t include non-economic
factors; they are just output
measures.
Achievement
Any ONE of:
 an increase in
RGDP shows
an increase in
actual / real
output
 an increase in
productive
capacity
shows an
increase in
potential
output
 movement of
economy
closer to the
PPC.
States Net Social
Welfare as the
alternative
measure for
economic growth.
Merit
General
explanation of
ONE of:
 difference
between real
GDP and
productive
capacity
 why the
economy
moves closer
to maximum
output (closer
to PPC).
General
explanation that
includes why Net
Social Welfare is
a preferable
measure by
referring to
economic and
non-economic
factors AND
explains that the
other measures
are just output
measures.
Excellence
Code
In-depth
explanation
linking increased
efficiency to
moving closer to
maximum output /
PPC, to
increasing real
GDP and
economic growth.
A/M/E
In-depth
explanation that
includes why Net
Social Welfare is
a preferable
measure by
referring to
economic and
non-economic
factors and
explains that the
other measures
are just output
measures
AND provides
specific
examples.
A/M/E
NCEA Level 2 Economics (90796) 2010 — page 3 of 4
Q
THREE
(a)
(b)
(c)
Evidence
See Appendix Two.
For the Haitian economy to
recover and grow, it is
important that investment
takes place ie more capital
goods. This investment could
be in the form of restoring
transport, electricity, water,
and sewerage infrastructure.
This investment will enable
more to be produced (outward
shift of PPC) so future
economic growth will occur
and future consumption needs
will be met.
Continued emphasis on the
provision of current
consumption such as water
and food will reduce the
resources available for
investment.
 Investment in human
capital has the ability to
increase the skill level of
labour resources, so
productivity will increase.
 Human capital investment
will lead to more people
with the ability to innovate
and develop new
technologies, so
technology will improve.
With increased productivity
and technology, the productive
capacity and output of the
economy will increase,
resulting in increased growth.
Achievement
Merit
 PPC shifted to
the left and
down (arrow
drawn or new
curve labelled),
showing
reduced
productive
capacity on
both axes
AND
General
explanation of the
idea that provision
for current
consumption
needs to be given
up to enable
investment as
resources are
limited
AND this will
result in growth in
the future.
In-depth
explanation of
how foregoing
current
consumption for
investment will
enable Haiti’s
future
consumption
needs to be met.
Must include link
between
increased
investment,
growth in the
future and
meeting future
consumption
needs.
A/M/E
General
explanation that
includes how
investment in
human capital will
improve
productivity AND
technology.
In-depth
explanation,
including how
investment in
human capital will
improve
productivity AND
technology;
AND linking
answer to greater
output and more
growth.
A/M/E
 idea that
investment
needs to take
place for the
Haitian
economy to
grow.
Identifies that
investment in
human capital will
improve
productivity
OR
technology.
Excellence
Code
Judgement Statement
Achievement
Achievement with Merit
Achievement with Excellence
4A
3M
1A
3E
1A
NCEA Level 2 Economics (90796) 2010 — page 4 of 4
Appendix One – Question Two (b)
Graph One
Appendix Two – Question Three (a)
Graph Two